Bookkeeping Basics: The Complete Guide

If you’re starting or already running a small business, chances are you know a thing or two about bookkeeping basics. You can’t run a business without some form of bookkeeping.

Getting it right in this area is important to the long-term growth and stability of your business venture. If you don’t know how to handle bookkeeping yourself, you should hire a qualified professional to help you.

Want to get familiar with some bookkeeping basics? Read on to get a general introduction to the world of bookkeeping.

Importance of Bookkeeping

When it comes to any kind of business, there are important financial and organizational matters that must be attended to. This is where bookkeeping comes in.

The main responsibility of a good bookkeeper is to record, classify, and organize all transactions of the business. They should also have good techniques for recording all of those transactions.

Doing things right when it comes to accounting in your business is essential. You don’t want the IRS coming after you for failing to document your business’s activities properly.

Doing your bookkeeping right gives you an accurate picture of your company’s finances and helps you stay away from running into cash flow issues. This is a big part of maintaining strong business relationships, too.

Bookkeeping Basics

You are probably familiar with the way profit-making works. The amount of money you’re drawing in should exceed the amount of money you’re paying out.

Types of Accounts

If your company runs on a model that does not immediately collect money from customers, you’ll need an Accounts Receivable section. This is money that is due to you which can be collected from customers.

If you sell products, you’ll also want to keep track of your inventory. Knowing how many items you have in stock at any given time can help prevent mishaps and ensure everything is flowing smoothly.

The outgoing money section is called Accounts Payable. This consists of the bills you need to pay and whatever money your company owes. You’ll need to keep a careful eye on this to ensure that you don’t pay a bill twice or pay a bill too late.

Paying bills on time or early is a good goal to aim for. Knowing what’s going on in this area will help you ensure that you have adequate cash flow for your business’s needs.

Payroll and Other Categories

Payroll is another important facet of bookkeeping basics. This consists of all the people you have on your team — employees, staff, and the like. They’re going to expect their salary in a timely manner, and it’s up to you to make this possible.

Other categories to consider are Loans Payable, revenue from sales, purchases, and more.

After you have learned the bookkeeping basics and understand the importance of keeping these matters in order, bookkeeping may become second nature to you.

It may not be your forte, but you do need to understand how to keep your business running smoothly if you truly want to achieve success.